Yes, the troubled Honolulu rail project has been at a crossroads many times before, but without question, this is a huge one.
Construction of the $9.2 billion project, long mired in delays and rising costs, has hit multiple, additional barriers. One is that the city administration has withdrawn from the public-private partnership (“P3”) in the works for building the final segment and to operate and maintain the system.
That seemed an abrupt move, especially given that, due to the confidentiality of the P3 process, the reasons have not been disclosed more than a week after the announcement. It’s also an awkward time for such a twist in the road — close to a election for Mayor Kirk Caldwell’s successor, who should get a chance to weigh in.
Although the deal prospects are not yet public, it does make sense that the overseeing Honolulu Authority for Rapid Transportation is not rushing to cancel the procurement on this still very worthwhile public transit system.
Instead, while evaluating its options for the way forward, HART executives must seek a delay in issuing a final decision to the Federal Transit Administration (FTA) until the next mayor is brought up to speed and has a say as well.
That federal agency has been holding up the release of the remaining $744 million in the federal full funding grant agreement, a critical component of the project’s funds, until the financial plan for completion is nailed down. Inking the P3 contract was seen as key to releasing the funds.
Caldwell alerted the FTA on Sept. 25 that the city — who is a party with HART to the P3 joint procurement — had decided to pull out of the P3 and then announced the decision publicly.
“I remain committed to the rail project and encourage HART to explore a more open and effective approach of continuing the construction to Ala Moana,” Caldwell said in a prepared statement.
That came as a surprise to Oahu residents generally, and to the Honolulu City Council in particular: Everyone had been told the P3 process offered advantages over the traditional design-build mode of contracting.
On Thursday, Caldwell told the Honolulu Star-Advertiser that, although he still could not detail his evaluation of the pending P3 deal, he reminded constituents of the partnership’s promised yield.
A P3 is supposed to add control to the rail-building timetable, since the contractor would have incentive to stay on schedule and save more of the set revenues. It’s supposed to shift more of the risk of unexpected costs away from taxpayers’ shoulders and onto the vendor. And it should control costs up front, since the vendor can recoup much of the operational revenue on the back end.
“I don’t think any of those have transpired,” Caldwell added. The terms remain unknown, but HART at the outset of P3 bidding had estimated the cost for the work at $1.4 billion.
Did the pricetag go well beyond that? Was there the likelihood of unwanted taxpayer operational costs once the system was finished? Nobody can say, at this point — although it didn’t help that P3 delays pushed it into the current difficult landscape of the coronavirus pandemic.
The mayor underscores his continued support of rail. But he hasn’t yet been able to make the case that the conventional bidding route would work better, in the end.
There are also political considerations that can’t be ignored. Politicians with ambitions of future advancement — Caldwell has had his eye on the governor’s job for some time — have the motivation to put some distance between themselves and a controversial project’s most expensive section.
That’s why it would be best to involve the next city administration, whether it’s headed by candidates Keith Amemiya or Rick Blangiardi, who would be more immediately accountable for the P3 decision.
Meanwhile, the work on one of the project’s biggest challenges, the relocation of utilities along the congested Dillingham Boulevard corridor, has run into major snags. Andrew Robbins, HART’s CEO, said the underground space for utilities, allowing the guideway to be built overhead, is limited in spots; the city declined to issue variances to squeeze them in.
So HART now must spend time — and money — acquiring more parcels and redesigning those difficult “pinch points.” Robbins said undergrounding now would be suspended there while contractor Nan Inc. shifts instead to utility work between Iwilei and Ala Moana.
That is a reasonable strategy, though it’s sure to add even more than the anticipated delays and costs.
Robbins himself faces difficult odds: There has been a push to replace him as CEO. After key lawmakers and staff offered their support, however, the HART board has backed off. Backers rightly argued that this is the wrong time to destabilize the project further. In fact, Robbins should be given in the next month or two at least a reasonable contract extension to manage the difficult year or more ahead.
With so much change anticipated soon, especially in local governance, Honolulu needs people in place who know the road just traveled, and who have some hope of steering through the twists and turns in front of us.
